Post Number: 452
|Posted on Thursday, January 30, 2003 - 03:53 pm: ||
Biggest shake-up of credit laws for a generation
Jan 30 2003
The rules governing the licensing of credit businesses are set for their biggest shake up in nearly thirty years with the publication today of proposals by Minister for Consumers, Melanie Johnson. The changes will give extra powers to the Office of Fair Trading (OFT) and help drive rogue traders from the market place.
The proposals unveiled today include:
- A more stringent test for companies looking to set up as credit businesses;
- Fines for companies who step out of line;
- Targeted action on rogue traders to protect the public
- Ensuring consumers are given clearer information on the terms of credit agreements;
- Checks being carried out before companies raise the limits on credit cards, overdrafts and loans; and
- Clearer guidance on the "sympathetic" treatment of consumers who are in arrears over debt repayments.
The initiatives were outlined in a consultation paper "Tackling Loan Sharks - And More!" and the government response to the second report of the Task Force on Tackling Overindebtedness, which were both published today.
The Office of Fair Trading (OFT) will be given new powers to oversee the regime, improving enforcement and helping drive rogue traders from the market place.
Melanie Johnson, said:
"This is the biggest shake-up of credit companies for almost 30 years. There is no place for rogue traders, preying on vulnerable consumers, in today's credit market. The current system of credit licensing was designed to deal with a credit sector that was much smaller and less sophisticated than the one we have today. I want to make the licensing rules appropriate for today's competitive marketplace, and to provide OFT with the right tools to protect consumers. These proposals will enable OFT to issue fines as well as revoke licences. They will also lead to an increased role for the OFT in monitoring work and more visible enforcement action."
The consultation is the latest stage in the DTI's ongoing review of the Consumer Credit Act. Melanie Johnson has already announced her intent to remove the existing upper limit of £25,000 on credit agreements governed by the Act, and consulted on making the rules on early settlement of credit agreements fairer, as well as enabling consumers to conclude credit agreements online.
The Task Force on Tackling Overindebtedness and Melanie Johnson's response identify actions which the Government will take to secure significant improvements in protections for consumers, and outlines measures she would like the industry to address, to ensure consistent standards of responsible lending.
She also called on lenders who have not yet signed up to either the Banking Code or the Finance and Leasing Association Code to do so immediately.
The second report of the Task Force on Overindebtedness can be found at: http://www.dti.gov.uk/ccp/topics1/overindebtedness.htm
Business AM - UK News